CA CLS Estate Planning flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Community property presumption

Property acquired during marriage while domiciled in California is presumed community property; the presumption can be rebutted by tracing to separate property.

Surviving spouse intestate share

If decedent leaves one child or descendants of one child, spouse takes one-half of separate property and all community property; with more children, spouse takes one-third of separate property.

Holographic will requirements

A will entirely in the testator's handwriting, signed and dated; no witnesses required but must be proved by handwriting evidence in California.

Federal basic exclusion amount

For 2024, $13,610,000 per person for estate and gift tax; portability allows surviving spouse to use deceased spouse's unused exclusion.

Grantor trust rules

Under IRC §§671-679, if settlor retains certain powers or interests, trust income is taxed to the grantor rather than the trust.

Prudent investor rule

California trustee must invest as a prudent investor would, considering risk and return, diversification, and the trust's purposes.

Duty of loyalty

Trustee must administer trust solely in beneficiaries' interest and avoid self-dealing or conflicts of interest unless authorized by trust.

Small estate affidavit

California procedure allowing transfer of personal property up to $184,500 without probate after 40 days from death, using affidavit.

Pour-over will

A will directing probate assets into an existing trust; valid if trust identified and executed before or concurrently with will.

No-contest clause

California enforces in terrorem clause only if will contest brought without probable cause; court may deny enforcement if probable cause.

Step-up in basis

Inherited property generally receives fair market value basis at death under IRC §1014; community property gets full step-up for both halves.

Distributable net income

DNI limits trust/estate deduction for distributions and determines beneficiary income; includes taxable income plus adjustments.

California probate threshold

Estates valued over $184,500 (as of 2022) generally require probate; below that, small estate procedures may be available.

Trust funding

Retitling assets into trust name; essential for revocable trust to avoid probate; beneficiary designations pass by contract.

Annual gift tax exclusion

For 2024, $18,000 per donee; gifts above exclusion use lifetime exemption; no gift tax on direct tuition/medical payments.

Marital deduction

Unlimited federal estate/gift tax deduction for property passing to surviving spouse in qualifying form; requires inclusion in gross estate.

Trustee duty to account

Trustee must provide annual accountings to beneficiaries unless waived; accountings show receipts, disbursements, and assets.

Separate share rule

If trust has multiple beneficiaries, distributions allocated among separate shares; each share computes its own DNI.

Community property with survivorship

California allows spouses to hold title with right of survivorship, avoiding probate; full step-up in basis for both halves.

Creditor claim period

In California probate, creditors must file claims within four months after notice or 60 days after letters, whichever is later.

Advancement

Lifetime gift to heir treated as advancement only if declared in writing by decedent or acknowledged in writing by heir.

Will revocation by divorce

California law revokes provisions for former spouse in a will upon divorce, unless will expressly provides otherwise.

Trustee removal

Court may remove trustee for breach of trust, unfitness, or persistent failure to administer; trust may provide removal mechanism.

GST tax

Federal generation-skipping transfer tax applies to transfers to skip persons (e.g., grandchildren); exemption equals basic exclusion.

California property tax reassessment

Change of ownership triggers reassessment to fair market value; parent-child exclusion for principal residence and up to $1 million other property.

Simple trust

Trust required to distribute all income annually, no charitable contributions, no corpus distributions; income taxed to beneficiaries.

Complex trust

Trust that may accumulate income, make charitable contributions, or distribute corpus; taxed on undistributed income at compressed rates.

Attorney-client privilege after death

Privilege survives death; personal representative holds privilege for estate; exceptions for breach of duty or will contest.

Unauthorized practice of law

Non-attorneys, including financial advisors, may not draft legal documents or give legal advice; doing so is UPL.

Spousal property petition

California Probate Code §13500 petition confirms community property and surviving spouse's share without full probate administration.

Trustee compensation

Trustee entitled to reasonable compensation for services; may be set by trust instrument or court; must be prudent.

Throwback rule

Accumulated trust income distributed in later year may be taxed to beneficiary with credit for trust taxes paid.